Ballot Measure 101 loss in January would threaten State School Fund

Ballot Measure 101 could take a wrecking ball to Oregon’s budget on Jan. 23. A no vote would knock as much as a $320 million hole in the state budget that might require school funds to fill.

The measure is a response to House Bill 2391, itself an effort to patch Oregon’s 2017-19 budget shortfall. HB 2391 added an assessment on health insurance premiums and some hospital profits.

The Legislative Revenue office estimated the law would raise $673 million in the 2017-19 biennium. That money was crucial to closing Oregon’s $1.4 billion budget shortfall, allowing more money to go to the State School Fund. The law also helps generate $1.87 billion in federal matching funds for the 2017-19 biennium, according to the Legislative Fiscal Office.

A no vote on the referendum would reject the temporary assessments on insurers and part of the hospital assessment. The measure is not clear on when the hospital assessment would end. The Oregon Secretary of State’s Office estimates the state would lose $210 million to $320 million in revenue and $630 million to $960 million in federal matching funds.

The assessment pays for Medicaid expansion to the working poor, about 350,000 Oregonians. If the money is lost, most likely either low-income residents would lose health care or the Legislature would have to replace the money from other expenditures.

The OSBA Board of Directors voted Nov. 12 to support a yes vote on the referendum, which would keep the law as is. In addition to revenue concerns, OSBA board members noted that if the referendum fails and families lose medical coverage there could be significant repercussions on student health.

OSBA did not take a position on HB 2391 because although the law made more state money available for the State School Fund, premium hikes could be passed onto school districts.

OSBA supports Ballot Measure 101, though, because the ripple effects of losing the extra revenue could hit schools. Unless other taxes are created, the state budget would have to be rebalanced. The State School Fund accounts for about 39 percent of the state discretionary budget. If the cuts were spread evenly across the budget, as is often the case, the State School Fund could lose as much as $125 million.

“Reductions in the second year of the biennium could devastate services for schools and kids,” said OSBA Executive Director Jim Green. “For some districts, there are going to be cuts they can’t easily weather.”

HB 2391 narrowly cleared the three-fifths voting requirement in the Legislature for raising taxes, with one Republican vote in the House and three Republican votes in the Senate.

State Republican Reps. Julie Parrish of West Linn, Sal Esquivel of Medford and Cedric Hayden of Roseburg filed the veto referendum, calling it a sales tax on health care. Esquivel voted for HB 2391.

Hayden said the repeal was necessary so that the premium assessments won’t get passed on to schools and so that Medicaid expansion costs are more broadly shared among Oregonians. He said he could offer alternatives to pay for Medicaid.

Typically such a referendum would have been scheduled for November 2018, but the Legislature called for a special election for Jan. 23. The Legislature reasoned that if the vote knocked down HB 2391, it could react during the February session, with more of the biennium to spread cuts or to raise funds.

Opponents of the tax say the special election date is an effort to reduce turnout. It is the only statewide measure on the ballot.